Bought some shares of LoJack (NASDAQ:LOJN) and wondering where the company is (progress-wise)? Never fear, dear shareholder. The information's on its way; LoJack reports its Q1 2006 results tomorrow.
What analysts say:
- Buy, sell, or waffle? Two analysts follow LoJack, and both rate it a buy.
- Revenues. Analysts believe that Q1 sales beat out last year's results by 11%. The target is $47.7 million.
- Earnings. LoJack is expected to report a 21% increase in profits, to $0.17 per share.
What management says:
In February, LoJack reported its Q4 and full-year 2005 earnings (see Steven Mallas' comments here, including his estimate of LoJack's true worth). CEO Joseph Abely pronounced himself "pleased" with the firm's 31% increase in annual sales and 50% increase in profits per share (although I imagine shareholders would have been more pleased if those per-share profits had been closer to the firm's net income gain of 77%).
Two of Abely's comments deserve special mention and are likely related. First, the firm grew sales "despite a decline in new car sales of 7%" for the fourth quarter. Second, LoJack gained market share. Also in February, LoJack announced that it can repurchase up to 2 million shares over the next two years. As Abely noted, in the five months prior to this authorization, LoJack had repurchased 128,968 shares at an average price of $27.36 each. With LoJack now trading 13% below that average price, the company may well have been tempted to begin buybacks during the first quarter. We'll find out tomorrow.
What management does:
Gaining market share, as LoJack claims to have done, often comes at the cost of cutting prices. According to Abely, this was true for LoJack -- but the firm made up for lower gross margins by reducing operating costs. Result: Today, gross, operating, and net margins are all significantly higher than they were a year ago.
|
Margins % |
9/04 |
12/04 |
3/05 |
6/05 |
9/05 |
12/05 |
|---|---|---|---|---|---|---|
|
Gross |
51.5 |
52.5 |
52.5 |
53.1 |
53.6 |
53.3 |
|
Op. |
10.8 |
11.1 |
11.5 |
12.6 |
14 |
14.1 |
|
Net |
7 |
7.1 |
7.3 |
8.3 |
9 |
9.7 |
One Fool says:
LoJack's a wonderful company -- growing fast and getting more profit every day. If this Fool could have one wish, though, it would be for LoJack to treat its shares' owners better and to let them share in the company's good fortune. Sadly, that's not happening today.
Say the company exercises its authorized share buyback in full, draining its cash reserves and leaving it with $20 million in debt in the process. Buying back 2 million shares would reduce LoJack's share count by 10.4%. Which sounds good, until you realize that over the last 12 months, LoJack has diluted its shareholders' stake by 12.4% -- meaning that a wholesale stock buyback would not even cover last year's dilution. Perhaps if LoJack's management held more than a piddling 3% stake in the company, it'd have a better appreciation for how very wrong that is.
Competitors:
- Pointer Telocation (NASDAQ:PNTR)
- Hawk (AMEX:HWK)
- Ituran Location & Control (NASDAQ:ITRN)
- Sony (NYSE:SNE)
- Mace Security (NASDAQ:MACE)
- Numerex (NASDAQ:NMRX)
Fool contributor Rich Smith does not own shares of any company named above.
